Enbridge faces rising costs, opposition after Gateway approval

‘We’re not celebrating,’ says CEO.

A worker uses a small boat to move logs on B.C.'s Douglas Channel, the proposed termination point for an oil pipeline from Alberta as part of the Enbridge Northern Gateway Project.

By:The Canadian Press, Published on Fri Dec 20 2013

VANCOUVER—Opponents of the Northern Gateway say the war against the pipeline will now be waged against the federal government, where the decision rests after a federal review panel gave the project a green light.

A coalition of environmental groups says Enbridge may have the panel’s approval but it does not have public approval.

Gerald Amos, of the Friends of Wild Salmon and former Haisla chief, was joined at a Vancouver news conference by representatives of Forest Ethics Advocacy, the Fort St. James Sustainability Coalition, the Living Oceans Society and the United Fishermen and Allied Workers Union the day after the National Energy Board released a panel report approving the pipeline.

Ben West of Forest Ethics says three options remain for stopping Northern Gateway: legal action, political action and direct action.

West says he hopes it doesn’t come to direct action but if it does, the protests will make the clashes over old-growth logging in British Columbia two decades ago “look like a walk in the park.”

Enbridge, Canada’s biggest pipeline company, next must seek approval from the federal government, which has 180 days to review the project.

“We’re not celebrating,” Enbridge chief executive officer Al Monaco said during a conference call. The conditions imposed by the regulator are “tough” and the approval is “just one step” in getting the project built, he said.

The pipeline from Alberta to the Pacific Coast would help discounted Canadian crude reach international markets and earn higher prices. Northern Gateway has faced delays like other oil-sands pipeline projects, including TransCanada Corp.’s Keystone XL.

“This isn’t a win yet for Enbridge,” Bob Schulz, a professor at the University of Calgary’s Haskayne business school, said in an interview. “It’s not a done deal. No one knows how much all of this will cost.”

Calgary-based Enbridge contested the regulator’s $7.9 billion cost estimate for the project, while conceding its current $6.5 billion projection will likely increase when it updates costs in the first quarter, according to Monaco.

“The big issue is margins on what these producers can get for their oil,” Schulz said. With rising costs to build the pipeline, Enbridge may try to pass on those costs to producers, who may balk, he said.

Suncor Energy, Canadian Natural Resources and Cenovus Energy are among producers that need more options to transport their crude to market, including Keystone XL, which must receive U.S. approval because it crosses the Canada-U.S. border en route to the Gulf coast.

Canadian oil-sands output is set to more than double from last year to 4.5 million barrels a day by 2025, according to the Canadian Association of Petroleum Producers, an industry group.

The gap between Canadian heavy crude and West Texas Intermediate, the U.S. benchmark, has widened to $23.75 (U.S.) a barrel from $18.25 on Jan. 9, 2012, the day before the National Energy Board began its review of the project.

With files from Bloomberg

More on thestar.com

We value respectful and thoughtful discussion. Readers are encouraged to flag comments that fail to meet the standards outlined in our
Community Code of Conduct.
For further information, including our legal guidelines, please see our full website
Terms and Conditions.